February 8, 2021

7.1% monthly increase of FAO's Cereal Price Index

The United Nations' Food and Agriculture Organization's (FAO) Cereal Price Index showed a sharp 7.1% monthly increase, led by international maize prices, which surged 11.2% and are now 42.3% above their January 2020 level.

The uptrend reflected an increasingly a tight global supply amid substantial purchases by China and lower-than-expected production and stock estimates in the United States as well as a temporary suspension of maize export registrations in Argentina.

Wheat prices rose 6.8%, driven by strong global demand and expectations of reduced sales by Russia when its wheat export duty doubles in March 2021. Robust demand from Asian and African buyers underpinned strong rice prices.

This February's forecasts point to larger volumes of world trade and a sharp decline in global cereal stocks. Globally, cereal utilisation in 2020/21 is now forecast at 2,761 million tonnes, up 52 million tonnes from the previous season. Leading the increase is the robust use of coarse grains for feed in China. Worldwide utilisation of wheat and rice are forecast to rise by 0.7% and 1.8%, respectively, during the year ahead.

Global cereal stocks are forecast to decline by 2.2% to 801 million tonnes, their lowest level in five years. That would bring the world stocks-to-use ratio of cereals down to 28.3%, a seven-year low. The new figures reflect a massive downward adjustment to maize inventories in China.

World cereal trade in 2020/21 is now forecast at 465.2 million tonnes, a hefty 5.7% expansion from the previous season's record high. The raised estimates reflect large purchases of maize by China, particularly from the US.

- FAO